In times of economic crisis and very slow recovery, too many debts are not a rare condition. For this reason it will often happen that we meet the term ” debt consolidation “. What’s this? What is the meaning of this term ? How does it work?
To understand the meaning of the term debt consolidation, let’s start with a definition:
Debt consolidation is a financial product that gives way to extinguish outstanding debts, generally of multiple creditors, by obtaining only one new loan. In this way it is often possible to obtain an installment lower than the sum of all the small extinct installments
How debt consolidation works
The bank or financial institution assesses the debtor’s situation in order to assess whether it is possible to proceed with the start of the loan. A fundamental prerogative to be able to resort to debt consolidation is the early termination clause: existing debts must be able to be settled in advance.
When it is useful to resort to consolidation
Unforeseen expenses are always lurking and often add up to a debt condition at the limit of the bearable. When the regular repayment of installments and payments is at risk, the consolidation of debts is a solution that allows you to go back to breathing and taking care of a single monthly payment.
Debt consolidation loan offers the following advantages:
Lighter installment – Extinguishing existing loans with a new lower installment.
The inevitable feature of a debt consolidation: the only installment that replaces the myriad of installments to be paid.
Most advantageous rate – The interest rate may be more advantageous than the one agreed for current loans. A very valid reason to think seriously about debt consolidation with .
It must be said that the debt consolidation loan is not always applicable and does not always represent an advantage for the customer as it involves an increase in total debt exposure. So we invite you to carefully evaluate all the proposals you receive. This does not mean that in many cases the debt consolidation loan is an excellent solution for many families.